Thursday evening, Lumber Liquidators cleared another regulator hurdle related to laminate flooring sourced from China. The Consumer Product Safety Commission (CPSC) issued a statement and does not recommend that consumers pull up Chinese-laminate flooring installed in their homes as it could expose residents to increased levels of formaldehyde...

Together with the Consumer Product Safety Commission (CPSC), Lumber Liquidators announced an agreement stating: 1) the company will not sell the Chinese-made laminate flooring that was subject to the CPSC inquiry (which was pulled from store shelves in May 2015); and 2) it will continue the existing air quality testing program for consumers that purchased Chinese laminate from its stores between February 2012 and May 2015. In homes where Chinese-made laminate flooring is found to emit elevated levels of formaldehyde, the company will provide any required remediation...

So what is left? The last remaining serious legal issue is the Multi District Litigation (MDL) product liability lawsuit. Language in the company’s filings indicated that this consolidated class action lawsuit is scheduled to go to trial in November unless the parties reach a settlement before then...

We recently hosted the company’s senior leadership at our spring Boston conference. Prior to that, we also visited the company in Richmond, VA and toured a nearby store. Much progress has been made in a variety of business and governance areas. That said, the consequences of a negative result of the MDL – even if we believe the facts argue in favor of the company and that the likelihood is low – are potentially catastrophic. Accordingly, we continue to monitor the situation closely, awaiting further developments.

Bugatch rates shares of Lumber Liquidators Market Perform.

Shares of Lumber Liquidators have jumped 18% to $15.64 at 11:12 a.m. today.

Lumber Liquidators: ‘Potentially Catastophic?’

Raymond James analyst Budd Bugatch and team write that a class-action lawsuit against Lumber Liquidators (LL) could be &quot;potentially catastrophic&quot; despite today's decision by the Consumer Product Safety Commissionnot to recall the company's Chinese-made laminate flooring.

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